WHAT IS PLANNING?

PLANNING IS THE PROCESS OF

 Setting objectives
 Determining what should be done to
accomplish them
 Implementing the plan
 Evaluating the results of the plan
PLANNING HELPS MANAGEMENT
ANSWER THE FOLLOWING QUESTIONS:
 Where are we now?
 How did we get here?
 Where would we like to be?
 How do we get there?
 Are we on course to achieve our targets?
STAGES INVOLVED IN THE
PLANNING PROCESS
 Analyze the external environment
 Analyze the internal environment
 Define the business and mission
 Set corporate objectives
 Formulate strategies
 Make tactical plans
 Build in procedures for monitoring and
controlling
THE PLANNING PROCESS
(ADAPTED FROM FIGURE 7.3)

Task 2:
Diagnose
opportunities
and threats
Task 1:
Task 4: Task 5:
Develop vision,
Develop Prepare strategic
mission
strategies plan
and Goals
Task 3:
Diagnose strengths
and weakness

Task 8: Task 7: Task 6:

Continue Control and Prepare tactical
planning diagnose results plans

Copyright © 2005 by South-

Western, a division of Thomson
Learning
All rights reserved 5
PLANNING TAKES PLACE AT DIFFERENT LEVELS
OF A BUSINESS – THE MAIN LEVELS BEING:

 Strategic plan
 Tactical plan
 Operational plan
STRATEGIC PLANS
 Strategic plans are designed with the entire
organization in mind and begin with an organization's
mission.

 To develop long-term strategies for achieving growth,

improving productivity and profitability, boosting
return on investments, improving customer service and
finding ways to give back to the community in which it
operates.

 Strategic plans also tend to require multilevel

involvement so that each level of the organization
plays a significant role in achieving the goals being
strategically planned for.
TACTICAL PLANS
 Tactical plans support strategic plans by
translating them into specific plans relevant to a
distinct area of the organization. Tactical plans
are concerned with the responsibility and
functionality of lower-level departments to fulfill
their parts of the strategic plan.

 EXAMPLE: As a tactical planner, Martha needs to

create a set of calculated actions that take a
shorter amount of time and are narrower in scope
than the strategic plan is but still help to bring
the organization closer to the long-term goal
OPERATIONAL PLANS
 Operational plans are the plans that are made by frontline,
or low-level, managers. All operational plans are focused on
the specific procedures and processes that occur within the
lowest levels of the organization.

 Operational planning activities would include things like

scheduling employees each week; assessing, ordering and
stocking inventory; creating a monthly budget; or outlining
an employee's performance goals for the year.

 Operational plans can be either single-use or ongoing plans.

Single-use plans are those plans that are intended to be
used only once. Ongoing plans are those plans that are built
to withstand the test of time. Ongoing plans are typically a
policy, procedure or rule.
CONTINGENCY PLANS
 Even the best plans can fail, especially in
today's fast-paced, chaotic business
environment, and as such, it is important for
managers at all levels to engage in
contingency planning.

 Contingency plans allow a manager to be

flexible and change-savvy by providing an
alternative course of action, which can be
implemented if and when an original plan
fails to produce the anticipated result.
PURPOSE OF BUSINESS
PLANNING
 Clarify direction of the business
 Ensure efficient use of resources
 Provide a way of measuring progress
 Support effective decision-making
 Co-ordinate activities
 Allocate responsibility
 Motivate & guide people
DON’T FORGET THAT PLANNING IS
DIFFERENT FROM FORECASTING:
 Forecasts are predictions - they concern
events and trends over which the business
has little or no control
 Plans are about what the business intends to
do
 But forecasts (especially sales forecasts) are
essential in planning